U.S. and World News
- This morning, a Reuters report confirmed that the U.S. Department of Commerce will take action to prevent future downloads of the popular application TikTok if a deal isn’t made by Sunday evening. Additionally, Chinese application WeChat will be shut down in the United States by Sunday if a deal is not made by then according to Commerce Secretary Wilbur Ross. Talks between TikTok and a number of U.S. companies have been ongoing, however, China has indicated that they do not want TikTok’s content-recommendation algorithm not be transferred to the United States as part of any deal. The Department of Commerce stated that “The Chinese Communist Party CCP has demonstrated the means and motives to use these apps to threaten the national security, foreign policy, and the economy of the U.S.”. The actions that have been threatened are only to prevent downloads and updates of the applications, and not an outright ban of use. The administration stated that TikTok would be banned in the United States if no deal is reached by November 12th, leaving more time for negotiations.
- Federal Chairman Jerome Powell stated at this week’s FOMC meeting that “over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.” The purchases of Treasuries and mortgage-backed securities by the Federal Reserve has been done at a pace of $80 billion and $40 billion a month respectively. Also, the Federal Reserve is forecasting the fed funds rate to remain at 0% through 2023.
- Markets moved lower this week. The S&P 500 fell -0.61% and closed at 3,319. The Dow Jones inched lower by -0.01% and closed at 27,657. Year-to-date, the S&P 500 is up 4.16% and the Dow Jones is down -1.35%.
- Interests rates rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.28% and 0.69%, respectively.
- The spot price of WTI Crude oil fell surged week. Prices rose 9.64% and closed at $40.93 per barrel. Year to date, Oil prices are down -32.97%.
- The spot price of Gold rose 0.65% and closed at $1,810.42 per ounce. Year to date, Gold prices are up 19.32%.
- Initial jobless claims fell by slightly less than expected to 860,000 and the four-week moving average of claims fell by 61,000 to 912,000. Claims fell by 15,000 in Texas, 9,000 in Louisiana, and by 8,000 in Georgia. Claims rose by 3,000 in Indiana, 3,000 in Kansas, and by 3,000 in Nevada.
- The level of housing starts fell by -5.1% to a seasonally-adjusted-annualized rate of 1,416,000 versus expectations for a decline of -0.6%
- Building permits fell by -0.9% versus expectations for a 2.0% increase
- The Philadelphia Fed manufacturing index fell by 2.2 points to 15.0, in-line with expectations
- Import prices rose by 0.9% versus expectations for an increase of 0.5%
- Import prices ex-petroleum rose by 0.7% versus expectations for an increase of 0.3%
- Industrial production rose by 0.4% versus expectations for an increase of 1.0%
- Retail sales rose by 0.6% versus expectations for an increase of 1.0%
- Retail sales core/control fell -0.1% versus expectations for an increase of 0.3%
- Business inventories rose by 0.1%, in-line with expectations
- The current account balance came in at -$170.5 billion for the second quarter versus expectations for a reading of -160.0 billion
- The University of Michigan’s index of consumer sentiment rose by 4.8 points to 78.9 in the preliminary report versus expectations for a reading of 75.0
Fact of the Week
- The World Health Organization (WHO) declared the COVID-19 outbreak a pandemic on 3/11/20. In the 6 months from 3/11/20 through last Friday 9/11/20, the S&P 500 has gained +23.0% (total return) (source: BTN Research).
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